Trump Memecoin Frenzy: Who Really Wins?

The TRUMP memecoin has sparked a trading frenzy after announcing a gala dinner with Donald Trump for top holders. Prices surged nearly 60% in an hour. However, the real winners seem to be companies like CIC Digital and Fight Fight Fight, which own 80% of the coin and profit through trading fees. Analyses suggest a possible price drop after the dinner-driven buying frenzy subsides.

In a surprising twist in the cryptocurrency world, the team behind the Donald Trump memecoin kick-started quite the trading frenzy this Wednesday. They announced that holders of the largest amounts of the cryptocurrency could receive an invitation to an exclusive gala dinner featuring the US president himself. The event is set for May 22 and promises a front-row seat to insights from Trump about the future of crypto, according to a listing on the TRUMP coin website.

Traders jumped on the opportunity to scoop up the TRUMP coin, some trying to secure a coveted dinner spot while others were eager to make a quick profit. The result? A staggering price spike of nearly 60% within just an hour, as tracked by blockchain analytics firm Nansen.

Yet, the real winners in this scenario might not be the everyday traders but rather two companies, CIC Digital LLC and Fight Fight Fight LLC. These firms own about 80% of the TRUMP coin supply and are more focused on trading volumes than on market price alone. Since the launch of the coin back in January, they routed 10% of the total supply into a liquidity pool, allowing the coin to be traded more easily.

By facilitating market making—that is, creating a balance in supply and demand—the Trump-linked organizations earn fees that range from 0.1% to 10% per trade, depending on demand. Nathan van der Heyden, head of business development at crypto firm Aragon, sums it up nicely: controlling market making means these firms are primarily concerned with trading volumes rather than the coin’s price itself.

Past reports indicate that these Trump-associated entities have made tens of millions from trading fees related to the TRUMP coin. Following the dinner announcement, they reportedly garnered $1.6 million in fees in just a day through Meteora, the exchange that launched the token. Most of this cash flow will trickle back to the large contributors, namely CIC Digital and Fight Fight Fight.

Now, on the surface, these organizations might profit from the TRUMP coin if its price sees any appreciation. However, they can’t sell their holdings—thanks to restrictions preventing access for three years and concerns over backlash from any sell-offs that would likely cause a price plunge. As van der Heyden puts it, profiting from selling their own coin looks “terrible,” while earning from market making keeps their reputation intact.

But for those who bought into the TRUMP coin as its value shot up, a risk looms. The allure of the dinner may push prices higher, but analysts like Noelle Acheson warn that once that incentive fades, a drop is likely. This could happen even as future perks for coin holders might buffer against some downturn.

Interestingly, savvy investors—dubbed “smart money” in the crypto world—seemed to pivot away from the TRUMP token, selling off stakes even as the price was climbing. Nicolai Søndergaard, a research analyst at Nansen, confirmed that these seasoned traders were steering clear of the Trump-based cryptocurrency.

When Trump first launched this memecoin, criticisms flew. Detractors labelled it a blatant cash grab, raising alarms that it could also serve as a conduit for bribery by enabling politically motivated actors to gain favour by inflating its value.

This latest dinner strategy appears to put those fears into sharp focus, potentially allowing access to the president in exchange for holding considerable amounts of his coin. The leaderboard showing the largest holders on the TRUMP website, though, keeps their identities hidden behind alphanumeric crypto wallet addresses. Meanwhile, the White House has not yet commented on this turn of events.

Finally, van der Heyden insists that those in the crypto industry see through what Trump is up to: “His understanding of crypto is extremely superficial. He only cares because he sees potential personal gains.”